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S UMMARY of N VVN’S VIEWS & SUGGESTIONS on C ERC STAFF PAPER ON DEVELOPING A COMMON PLATFORM FOR ELECTRICITY TRADING. National PX v/s Many (Region Level) Exchanges. Assignment of Transmission Capacity to Day-Ahead Trading Through PX. Bids Based On Marginal Costs. Price Mitigation.
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SUMMARYofNVVN’S VIEWS & SUGGESTIONSonCERC STAFF PAPER ON DEVELOPING A COMMON PLATFORM FOR ELECTRICITY TRADING
DEVELOPMENTOFPOWER EXCHANGE AT NATIONAL LEVEL NTPC Ltd NVVN Ltd
An initiative forSelection of PX Model for India • Analysis of Indian Electricity Trading Market • Study of International Electricity markets • Consultations with MoP, CEA, PGCIL and PTC • Development of DPR for PX in India Consultants: Consortium of M/s NordPool Consulting AS, Norway and M/s CRISIL, India
Preparatory Work Done • A professionally prepared DPR • Consultations with other stakeholders during preparation of DPR • Core Team • Workshop for stakeholders • Full implementation plan available • Hardware & software issues • Procurement, Training & Implementation • Model Agreements • Business Case
Our Proposal • Power Exchange may be promoted as a separate company by key players in power sectors and gradually provided with more diversified ownership and governance structure. CERC Staff Paper on PX also recommends a diversified ownership. It is common to find examples of PX promoted by the stakeholders in European Markets. • Development of Power Exchange for physical delivery market is complex due to nature of electricity. Therefore, the design of the product, trade system and operational procedures require a thorough understanding of generation, transmission, consumption and trading of electricity as well as system operation.
Our Proposal • The focus of PX is market development. In India, the trading market is small and limited to tradable short-term surplus. Therefore support and participation by market players is crucial for market development. • CPSUs under the MoP are respective market leaders, possess significant domain knowledge, technical & managerial expertise and financial strength. They also have an experienced pool of necessary manpower to support the creation and operation of PX. Further, the Government Companies playing a leading role in the development of PX shall provide significant comfort to the market participants with regard to neutrality and transparency.
Our Proposal • Accordingly, the following may be considered for establishing the Power Exchange: • Power Exchange shall be promoted as a separate company under the Companies Act with CPSUs under MoP as the initial promoters, who shall contribute Initial 50% of the authorized capital in equal proportion. (Authorized capital shall be of the order of Rs. 50 crores.) • Balance 50% of the authorized capital shall be issued subsequently to State power utilities, FIs, Banks, Traders etc. • Shareholding by an individual entity may be limited to 25% of the paid-up capital. • The Company shall have Shareholders’ representatives and also the nominee of CERC/ Government in suitable proportion on its Board of Directors.